BILL ANALYSIS Ó SB 1290 Page 1 Date of Hearing: June 27, 2012 ASSEMBLY COMMITTEE ON EDUCATION Julia Brownley, Chair SB 1290 (Alquist) - As Amended: June 20, 2012 SENATE VOTE : 24-14 SUBJECT : Charter schools: establishment, renewal, and revocation. SUMMARY : Requires the authority that granted a charter school to consider increases in pupil academic achievement for all groups of pupils served by the charter school as the most important factor in determining whether to grant a charter renewal or whether to revoke a charter school; and, requires a charter school to achieve its Academic Performance Index (API) growth target for schoowide and numerically significant pupil subgroups for renewal, as specified. Specifically, this bill : 1)Specifies, for both school district authorized and county board of education authorized charter schools, that the measurable pupil outcomes identified in a charter school petition shall include outcomes that address increases in pupil academic achievement both schoolwide and for all groups of pupils served by the charter school. 2)Requires the authority that granted the charter school to consider increases in pupil academic achievement for all groups of pupils served by the charter school as the most important factor in determining whether to grant a charter renewal. 3)Defines "all groups of pupils served by the charter school" as a numerically significant pupil subgroup served by the charter school. 4)Changes one of the existing academic achievement requirements for renewal by specifying that a charter school must attain its API growth target in the prior year or in two of the last three years both schoolwide and for all groups of pupils served by the charter school. 5)Requires the authority that granted a charter school to SB 1290 Page 2 consider increases in pupil academic achievement for all groups of pupils served by the charter school as the most important factor in determining whether to revoke a charter. EXISTING LAW : 1)Establishes the Charter Schools Act of 1992 which authorizes a school district, a county board of education or the state board of education (SBE) to approve or deny a petition for a charter school to operate independently from the existing school district structure as a method of accomplishing, among other things, improved student learning, increased learning opportunities for all students, with special emphasis on expanded learning experiences for students who are identified as academically low achieving, holding charter schools accountable for meeting measurable student outcomes, and providing the schools with a method to change from rule-based to performance-based accountability systems. 2)Authorizes a charter school to be granted for not more than five years, and to be granted one or more renewals for five years. Requires the renewals and material revisions of the charter to be based upon the same standards as the original charter petition. 3)Requires, commencing on January 1, 2005, or after a charter school has been in operation for four years, whichever date occurs later, a charter school shall meet at least one of the following criteria prior to receiving a charter renewal: a) Attained its Academic Performance Index (API) growth target in the prior year or in two of the last three years, or in the aggregate for the prior three years. b) Ranked in deciles 4 to 10, inclusive, on the API in the prior year or in two of the last three years. c) Ranked in deciles 4 to 10, inclusive, on the API for a demographically comparable school in the prior year or in two of the last three years. d) The entity that granted the charter determines that the academic performance of the charter school is at least equal to the academic performance of the public schools that the charter school pupils would otherwise have been required to attend, as well as the academic performance of the schools in the school district in which the charter school is located, taking into account the composition of the pupil population that is served at the charter school. SB 1290 Page 3 e) Has qualified for an alternative accountability system pursuant to subdivision (h) of Section 52052 FISCAL EFFECT : According to the Senate Appropriations Committee, potentially significant local costs to require charter authorizers (most of which are schools districts) to change the way they evaluate renewals, and state costs for state-authorized charter schools. These requirements could constitute a reimbursable mandate because the school districts that have authorized charter schools do not have a choice in having to review a charter renewal, even though the charter was granted before this bill's new restrictions were in effect. Thus, imposing new procedures on that required renewal process could be determined to be a state mandate on school districts. In the event that no changes are made to charter approval, renewal, and revocation statutes, the state risks losing up to $290 million in federal funding is has already been granted. COMMENTS : Charter School Background : According to the California Department of Education (CDE), there are currently 983 charter schools operating with student enrollment from 2010-11 of more than 369,000 in the state. This includes three statewide benefit charters and 18 State Board of Education (SBE)-approved charters. Some charter schools are new, while others are conversions from existing public schools. Charter schools are part of the state's public education system and are funded by public dollars. A charter school is usually created or organized by a group of teachers, parents and community leaders, a community-based organization, or an education management organization. Charter schools are authorized by school district boards, county boards of education or the state board of education. A charter school is generally exempt from most laws governing school districts, except where specifically noted in the law. According to the author, in October 2010, the California Department of Education (CDE) was informed by the federal Department of Education (DOE) that California's public charter school petition authorization, renewal and revocation laws were inadequate and therefore out of compliance with the Public Charter School Grant (PCSG) Program. The PCSG Program provides grants of up to $575,000 to plan and implement new charter schools. Its funding is integral to the successful development of successful and high quality public charter schools. Specifically, the DOE informed the CDE that the state is SB 1290 Page 4 partially out of compliance with Assurance 3A and completely out of compliance with Assurance 3B in the PCSG application because increases in pupil academic achievement in all groups of pupils as described in Section 1111(b)(2)(C)(v) of the Elementary and Secondary Education Act (ESEA) is not the "primary consideration" in the approval, renewal, and revocation of California charter schools. Assurance (3)(A) requires that (1) each charter school in the State operate under a legally binding charter or performance contract between itself and the school's authorized public chartering agency, (2) charter schools conduct annual, timely, and independent audits of the school's financial statements that are filed with the school's authorized public chartering agency, and (3) each charter school be required to demonstrate improved student achievement for all students. Assurance 3(B) requires that authorized public chartering agencies use increases in student academic achievement for all groups of students described in Elementary and Secondary Education Act (ESEA) Section 1111(b)(2)(C)(v) as the most important factor when determining to renew or revoke a school's charter. In an effort to resolve these areas of noncompliance through administrative means, the CDE engaged in a number of conversations, correspondence and meetings throughout the 2010-11 fiscal year to explain how current state statutes and regulations regarding charter authorization, renewal, and revocation pertained to and complied with the federal assurances. However, in the August 11, 2011 PCSG Award Letter, the DOE made it clear that the state is out of compliance with the last of the three factors listed in assurance 3(A) and the entirety of assurance 3(B). The DOE further explained that California is out of compliance because there is no explicit statutory or regulatory requirement that (1) each and every charter school demonstrate improved student academic achievement or (2) increases in academic achievement for all pupils be the primary factor in a renewal decisions (Assurance 3(B)). In addition, the DOE noted that California's revocation regulations apply only to charter schools in the lowest deciles and not all charter schools. Therefore, the DOE determined that the CDE is not in compliance with assurance 3(B). After exhausting efforts to resolve this matter administratively, the CDE determined that legislative action was the only option available to address the identified areas of SB 1290 Page 5 noncompliance in order to not jeopardize or put further at risk the $290 million it is scheduled to receive during the 2010-15 PCSG Program cycle. On September 1, 2011, the CDE sent a letter to the DOE committing to pursue legislation during the 2012 legislative year to resolve these areas of noncompliance. By passing this measure, the state can ensure that California will not put at risk or jeopardize much needed funding to support the establishment of high quality, high performing charter school operations for California students and their families. Policy or Technical Change ? While this bill makes changes to charter school renewal and revocation policies to align the state's statutes with the Federal requirements of the PCSG program, these changes are not technical. While the policy changes are not sweeping, they are also not unsubstantial. This bill specifies that a charter authorizer must consider increases in pupil academic achievement for all groups of pupils served by the school, as measured by the API, "as the most important factor" for renewal and revocation. This does not mean the charter school is automatically not renewed or revoked, but it does mean that the charter authority must consider this information as the most important factor in making its decision. In other words, the charter authority must give extra weight to this factor when it considers all the factors for renewal or revocation. Further the bill changes one of the academic requirements for renewal by requiring a charter school to attain its API growth target in the prior year or in two of the last three years both schoolwide and for all groups of pupils served by the charter school. Currently, charters must meet at least one of five measures in order to be renewed by their authorizer. This bill changes one of those measures. This change will make it more difficult for charter schools, that are struggling academically, to be renewed. Will this result in more charter school non-renewals and revocations ? Some number of charter schools (roughly estimated around 60 schools) will no longer meet any of the five academic criteria for renewal, due to the change in the API criteria. Because these schools will not meet the academic criteria for renewal, they will be in jeopardy of not being renewed. Arguments in Support : State Superintendent of Public Instruction Tom Torlakson supports the bill and states, "This bill would bring the California Education Code (EC) into compliance with the federal Public Charter Schools Grant Program SB 1290 Page 6 which provides $290 million in funding during the grant cycle. Specifically, this bill would amend EC sections 47605, 47605.6, and 47607 to make increases in academic achievement for pupils in all numerically significant subgroups, the most important factor when considering approval, renewal or revocation of a public charter school petition." Arguments in Opposition : K-12, Inc. and Charter School Capital oppose the bill and state, we believe that the changes necessary to conform to the United States Department of Education are best attained through the State Board of Education going through the process of drafting regulations, which they are currently doing, and not by rushing a bill through the legislature. This bill does not allow charter schools any chance to have input into the discussion and places unrealistic expectation on every charter school in the state. Additionally, there are no guarantees that this measure will put California in conformity with the Department's regulations because they have not weighed in on their effect yet. Previous & Related Legislation : AB 440 (Brownley) from 2011, which is on the Senate Floor Inactive file, establishes academic and fiscal accountability standards related to charter schools. SB 645 (Simitian) from 2011, which was held in the Assembly Appropriations Committee, would have authorized the Charter School Financing Authority (CSFA) to refinance working capital for charter schools; and, would have established new accountability measures for charter school renewal and expands eligibility of the Charter School Facility Grant Program (CSFGP). AB 1950 (Brownley) from 2010, would have established new academic and fiscal accountability standards for charter schools. This measure was held in the Senate Education Committee at the request of the author. AB 1991 (Arambula) from 2010, which failed passage in the Assembly Education Committee, would have required charter school petitions to be granted for five years; authorized charter school renewals to be granted for five to ten years; established an alternative renewal process for charter schools identified as persistently lowest achieving and schools that do not meet specified academic criteria; authorized the Superintendent of SB 1290 Page 7 Public Instruction (SPI) to establish alternative academic accountability standards for charter schools; and, combined the renewal appeals process with the revocation appeals process. REGISTERED SUPPORT / OPPOSITION : Support Superintendent of Public Instruction Tom Torlakson (Sponsor) San Francisco Unified School District Opposition California Parents for Public Virtual Education Charter School Capital Delta Managed Solutions, Inc. EdVoice K-12, Inc. School for Integrated Academics and Technologies (SIATech) Many individuals Analysis Prepared by : Chelsea Kelley / ED. / (916) 319-2087